My dad sparked my investment passion; Vanguard fueled it
My father was a payroll clerk by trade, but his true passion was investing. When I was growing up in the 1980s, every weeknight at 6 o’clock my dad watched The Nightly Business Report on PBS on our only TV. Needless to say, this was before the internet and CNBC (I know, I’m dating myself), so it was really the only way you could find out what happened in the markets before you read it in the newspapers the next day.
I vividly recall how my dad used to hoot and holler whenever good news boosted one of the stocks he owned, even though he regularly invested through up and down markets, reinvested the dividends, and held his stocks for decades. His passion sparked my interest in pursuing an investment career, which began at another investment firm performing research and oversight of institutional money managers. While I was aware of Vanguard and even owned some Vanguard mutual funds, at the time I had the impression that Vanguard was “just” an index shop, and not a “real” investment firm.
Boy, was I wrong.
My introduction to Vanguard
About nine years ago, I began to pursue an opening in Vanguard’s Oversight and Manager Search team. The more research I did on Vanguard, the more I realized that it was truly a world-class investment firm – active and passive, equity and fixed income. The crew I met with were smart yet humble, and the investment research was insightful and balanced.
I joined Vanguard in 2009 as a Senior Investment Analyst in the Portfolio Review Department, on the team that provides oversight of Vanguard’s investment managers and funds. I was able to learn about a lot of different investment approaches from not only Vanguard internal managers, but from the roughly 30 other world-class investment firms Vanguard partners with like Wellington, PRIMECAP, and Ballie Gifford.
Senior Investment Analysts 2013
Vanguard around the globe
One day in 2013, I was on my way to the Galley (the on-campus cafeteria) when my department head pulled me into his office and said, “We’re thinking of sending you to Hong Kong.” My reply was, “I was thinking of getting a sandwich.”
Ten months after that conversation, my wife, three kids, and I moved to Hong Kong where I was tasked with building Vanguard’s investment product function for Asia—designing and launching Exchange Traded Funds (ETFs) and mutual funds, and educating clients about them. It’s where I learned about the ETF ecosystem and retirement systems for Asian countries.
Asia Product and Investment Team 2017
After three years in Asia, I returned to our headquarters in 2017 to lead Vanguard’s Defined Contribution Advisory Services (DCAS) team. Ever wonder how a company decides which funds to offer its employees in their 401(k) plan? And how they oversee those funds? Well, our team of investment professionals delivers investment perspectives, evaluations, and custom portfolios to help those companies and their consultants do just that.
DCAS- ugly sweaters and curling!
A common thread
My three roles at Vanguard are very different and none of them are in the Investment Management division, but the one common thread was each requires a strong degree of investment acumen for success. Fortunately, Vanguard provides a ton of resources and support for crew to develop and deepen their investment acumen, from paid support for the Chartered Financial Analyst (CFA®) and Certified Financial Planner™ (CFP®) programs, free mobile access to the Wall Street Journal and other industry news sources, numerous internal investment training sessions, and more. As long as you bring a “growth mindset” and an intellectual curiosity, there’s no limit to your development.
I’ve seen Vanguard’s investment research, analysis, and portfolio management become more sophisticated and global over the years. But our investment philosophy has remained steadfast since our founding more than 40 years ago: set an investment goal, diversify your portfolio, keep your costs low, and stick to a plan —strikingly similar to my dad’s approach.
If you’re seeking an environment where you can make a difference and develop professionally, check out our career our opportunities at www.vanguardjobs.com.
Vanguard women break down investment acumen myths and perceptions
Vanguard’s crew resource group WILS (Women’s Initiative for Leadership Success) recently hosted a panel discussion with three female senior leaders in Investment Management to help breakdown investment acumen myths and misconceptions. In this blog, we recap the event and share how these discussions drive professional development and offer ways to improve this important skill-set.
Three panelists take the stage, each representing a different area of focus in Vanguard’s Investment Management group: U.S. Equity Investment Risk Management, Global Rates and Fixed Income Strategy, and Product Planning. Each share their diverse career journey – some had long investment management careers outside Vanguard, others spent time on our Client Services teams or in rotational programs. But all three were anxious to help the women and men in the audience overcome their struggles with the often intimidating world of investment management.
First, it was imperative that the panel define what encompasses Investment Acumen – how does it differ for those focused squarely and deeply in Investment Management from those whose leadership interests are more general?
Seeking deep investment acumen
Two of the panelists expressed the importance of specialization in Investment Management. Their career advice for those who are pursuing this path is to go deep on what interests you most. Develop conviction and an opinion in that area, pursue courses and/or certifications that will increase your knowledge and expertise. They conveyed that specialization is a great way to distinguish yourself.
General investment knowledge
It is also important to have foundational investment acumen for anyone working in Financial Services and at Vanguard. Prior to her current role, one of the panelists had spent the majority of her career in leadership and strategy roles, where she had a strong focus on developing crew. This leader shared that she was keenly tuned in to her learning style. She knew that it was important for her to deepen her investment acumen, so she sought a role to close what she felt were some gaps in this area. She also reinforced the importance of knowing yourself, “I have an all-in learning style so I knew an immersive experience was right for me.” For others in similar situations, she encouraged the audience to think about what unique strengths you bring to the table. How might you lean into those as you’re learning and contributing to a new group?
The panelists also shared their thoughts on how women in Investment Management can be perceived, and the unique challenges they have experienced in overcoming conscious and unconscious bias. The fact is that currently there are significantly fewer women than men in investment management. In everyday settings, women need to adopt strategies to make sure their diverse thoughts are heard. When any group of people is outnumbered, they tend to be heard less and more likely to get interrupted and dismissed.
These panelists advise us to keep swimming against the current. Seek to understand the dynamic of whatever group you’re in and develop a strategy for how you can fit in. It is important for each of us to be ourselves, while fitting into the environment as that self and on our own terms. A great foundation is to build your acumen and credentialize yourself as a valuable voice in the room. Everyone in the room was already doing that very thing – attending sessions like these builds acumen and strengths that enable crew to stand out.
Finally, the panelists recognized the opportunity each leader in investment management has to “represent women well.” Without diverse thinking, how can we meet the diverse needs of our clients?
If you’re seeking an environment where you can make a difference and develop professionally, check out our career opportunities at www.vanguardjobs.com.
Have you ever wondered what it’s like to do the actual investing at one of the world’s largest investment firms?
To find out, we spoke with two principals in Vanguard Equity Investment Group. Mike Buek is head of U.S. trading and Gerry O’Reilly leads a team of index portfolio managers. They gave us an inside look at a day in the life of a Vanguard trader.
Our conversation has been edited for length and clarity.
What is the role of a trader at Vanguard?
Mike Buek:Our trading desk acts as a combination portfolio manager and trader for Vanguard’s index funds. So we understand the entire investment process. We seek to minimize tracking error to the benchmark while at the same time minimizing the fund’s transaction costs.
We want an index fund to be 100% invested to its benchmark. We monitor any changes to each fund’s benchmark and match them in our trading.
Gerry O’Reilly: At the same time, our traders manage the trade-off between tracking error and impact. We employ proprietary trading strategies to try to minimize the impact our trading has on the overall market.
So if we have a large inflow to a fund on a given day, we have to decide whether we have market impact and still track the benchmark or if we can minimize impact by trading this inflow over multiple days. It’s important to look at each trade relative to the market so we can understand what the market can absorb.
Every trader on the desk employs strategies we’ve developed over the years. For example, we’re fans of using limit orders as a way to minimize impact.
How do you prepare before the market opens in the morning?
Mike Buek:We typically come in around 7, 7:30. We check what the international desks in London and Melbourne have done so far. Then we go right to reconciling each fund to make sure we’re 100% invested. For example, we may have expected to receive $50 million on a given fund the previous day, so that’s what we invested. But then the next morning, it turns out the fund received $55 million. We need to get that $5 million invested as soon as possible. In this case, we’d invest in futures to get the fund fully invested because the market isn’t open yet.
Gerry O’Reilly: Each trader also has to sign off on each of their funds in the morning, saying they agree with each fund’s status. Someone from investment risk also signs off, as well as the desk supervisor. So there are three different sets of eyes looking at the funds each day, making sure the starting line makes sense.
Each fund, based on its size, has a certain tolerance. For example, Total Stock Market Index is an enormous fund. If it starts the day with $10 million in cash, that isn’t a huge deal proportionally. It’s not even a basis point. But $10 million cash in one of our smaller funds could be a huge deal. Our investment risk group monitors those tolerances.
Knowing that you have someone keeping an eye on the performance of the fund and the benchmark is a big source of comfort. As much as we’d like to try to eliminate any potential tracking error, it’s probably unrealistic to think it will always be that way. We closely monitor what little tracking error there is.
Mike Buek: We also look at the performance from yesterday. We’ll look at every fund’s performance versus its index. If there’s anything off, we want to know why. If there’s a reason we knew about and it makes sense that we outperformed by 3/10 of a basis point—and that’s how deep it gets, explaining fractions of a basis point—we investigate so we can adjust and get the fund tracking as close to perfect as we can.
Mike Buek, Principal, Vanguard Equity Investment Group, U.S. Trading
How does the experience change throughout the day?
Gerry O’Reilly:Our data group gets notified of the index changes coming at that day’s close. Once you know an index change is coming, a fund tracking that index has to adjust.
On a given day, you could have 10 to 20 different corporate actions going on, such as a company issuing more shares. Each trader gets assigned a corporate action and takes point on that stock. They will figure out what each fund needs to do to ensure the index weights are correct.
Trading can get really busy when indexes add or remove names. Say, for example, XYZ Company has outgrown a small-cap index and is being added to a mid-cap index. We’d need to mirror that move in the funds tracking those indexes.
How does Vanguard manage the global nature of the market? What specific difficulties come up?
Mike Buek:When we go global, we’re passing trades to Vanguard’s European and Australian-Asian desks to execute. And they pass us trades to execute for their funds. The communication has to be good between the three desks so the traders executing each trade understand the objective.
That’s challenging because of the different hours, but with improved technology and our expanded team, we’re able to make sure our portfolio management is globally consistent.
Gerry O’Reilly:International trading can often involve more markets. In the U.S., we mainly deal with the NYSE and Nasdaq. In other regions, you might have 10, 15 different markets closing at different times with different rules. In Europe, you’re looking at “When’s Norway closing? What about Germany?” You have to make sure you get your orders down in time because if you miss it, you miss it.
The other obvious difference is currency. U.S. investors are giving us dollars, which we have to convert into local currency when we buy international stocks. So in addition to the equity trade, our teams need to address the currency piece in order to keep the cost of the trade to a minimum.
Without getting proprietary, what would you say sets Vanguard’s trading desk apart?
Gerry O’Reilly: At a high level, one of the things that differentiates our desk is the level of experience. Mike has 30 years at Vanguard, and most of that is on the trading desk. I’m at 25 years and almost 23 on the desk. I’d say the average tenure for our traders is probably 12 to 13 years.
On this desk, we have people who specialize in different areas. When we get information from the street from our brokers about what’s going on with a name, we can funnel that to the appropriate person to address that information.
You learn from experience. None of us are set in our ways. You have to be willing to change and learn from past experience.
All investing is subject to risk, including the possible loss of the money you invest.
If you’re seeking an environment where you can make a difference and develop professionally, check out our career opportunities atwww.vanguardjobs.com.
After working as an engineer for over 12 years, I decided to completely change careers and pursue my MBA full time. Why? I wanted to do work that I was good at, and passionate about. The thought of making a major career pivot was exciting, complex and risky at the same time. Where could I combine my aspirations for general management with my passion for helping people with their personal finances? Is it possible to transfer the skills that I acquired as a manufacturing engineer, technical sales engineer, and product manager? Or would I have to start over? How would I get up to speed quickly enough to make a meaningful contribution?
To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success.
This sounds a lot like my passion for people and their success with personal finance! And this mission is not just hearsay, it is the foundation for the work that gets done each day. For example, when I worked in the Institutional division, we were focused on helping plan participants achieve retirement success. When I worked in Enterprise Finance, we were focused on monitoring how well we were performing as a company for the benefit of our clients (fund performance, cost, client loyalty and risk management). Now I am working in Client Experience…I’m sure you get the point.
A supportive squad
There were 15 other professionals who joined the MBA Development program with me. Their academic and professional accomplishments have enriched my experience. This group has been my “speed dial” for many things like: learning the Vanguard organization, understanding various aspects of the financial services industry, and just getting connected and acclimated to a new working and living environment.
The additional benefit is that there are many cadres that have preceded us and they continue to make themselves available – sharing their insights to ensure that our experience is a success.
A quality offer
All leadership development programs are not created equal. These are some distinct elements of Vanguard’s approach to MBA development:
Program Qualifications – Vanguard looks for candidates with more pre-MBA work experience than most companies. This was very compelling for someone who worked for many years prior to business school. It was a signal to me that Vanguard values my past experience and provides opportunities for crew to transfer their skill sets.
Rotational Assignments – There is a lot of work that goes into matching participants and assignments at Vanguard. We are placed in departments that align our strengths, experiences, interests and even development opportunities, thus creating meaningful and unique on-the-job training.
Development (beyond the job) – The MBA Development program has created additional opportunities to enhance our professional development through: industry discussions, leader overviews, specialty workshops/trainings, assessments & feedback, MBA buddies, and corporate mentors.
There are other benefits to working at Vanguard (people & culture), but this is supposed to be a blog and not a book. In four days, I will celebrate my one year anniversary at Vanguard. As I reflect back on the excitement, complexity, and risk, one thing’s for sure – I would make the same choice all over again.
Check out this video to learn more about the MBA Development Program!
If you’re seeking an environment where you can make a difference and develop professionally, learn more about our MBA programs at www.vanguardjobs.com.
Vanguard has a wonderful tradition of recognizing crew service milestones; every 5 year anniversary is marked with a certificate and a gift. This year marked my 30th anniversary, which meant both another milestone gift and a chance to take stock of my career when a few of my best friends at work hooked me up with a special celebration.
As I said to my friends and colleagues that day, it is because of the mission and values of Vanguard and its people that I have stayed 30 years. Without those ethics, I wouldn’t have lasted 30 days. It’s pretty remarkable that 30 years later I feel as connected to the mission as I did that first year.
And why not! I’ve worked with so many different types of clients – individual investors, small and large employers, manufacturers and their employees, hospitals and universities, each with unique goals and circumstances. In each case, Vanguard was there to help and I was a part of the team. During my time serving Vanguard’s nonprofit investors I came to realize I may have the skills to give back to my own community. So while I was meeting with treasurers and investment committees during the day, I spent a few evenings and weekends a year serving on a nonprofit board for an organization serving families living in poverty. The boards I have served on benefit greatly from the skills I learned at Vanguard.
Over the course of 30 years, personal and professional accomplishments overlap and Vanguard becomes a partner as well as an employer. I earned an MBA while working at Vanguard and was reimbursed for the cost with the help of an academic assistance program for crew. At some point, I also managed to get married and adopt two children. (Vanguard helps offset the cost of adoption too!)
The other great part about a career at Vanguard is that you are empowered with financial literacy. You will save money in your 401(k) plan; you will know the difference between a Roth and Traditional IRA. And if you decide to raise children, you will fund a 529 plan with regular contributions. And along with all those accomplishments, you’ll work with great people, take some interesting vacations and wonder at your great fortune.
And if you have friends who plan a party for you when you hit your 30th work anniversary, you might get a VIP visit – including the newly named CEO, CIO, or Vanguard’s Global Chief Economist, Joe Davis, who also happens to be a great boss and a great person… AND get a personal note from our founder Jack Bogle. I was happy to share this celebration with many amazing people from all points along my career.
Did I forget to tell you what I picked out for my milestone gift? It was a kayak!
If you’re seeking an environment where you can make a difference and develop professionally, check out our career opportunities at www.vanguardjobs.com.